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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Road Walker who wrote (230037)	4/19/2005 9:29:01 PM
From: combjelly	Read Replies (2) \| Respond to of 1573003

"Proved to not work subsequent to the Reagan admin." What does that have to do with these ideal models?

To: Road Walker who wrote (230037)	4/20/2005 4:17:39 PM
From: TimF	Read Replies (1) \| Respond to of 1573003

Proved to not work subsequent to the Reagan admin. Not at all. The basic idea is beyond any reasonable doubt. If tax rates are too high tax revenue goes down. I believe that the top marginal tax rates at the time Reagan came in to office did exceed the level where this became a factor, and certainly government revenue did go up strongly under Reagan. However I don't think this applies to the situation before Bush came in to office. Marginal tax rates where much lower than they had been before Reagan's initial tax cuts. Any tax cut would be likely (at least in the short and medium term) to reduce revenue, so tax cuts where probably not revenue optimizing. Before Kennedy's tax cut in the 60s the top marginal rate was 91%. Reducing that to 70% clearly increased revenue. Reagan's initial cut from 70 percent on unearned income and 50 percent on wage and salary income also apparently increased Revenue. Bush's cuts where from much lower marginal rates so the Laffer Curve argument probably doesn't apply to them, and probably would not apply to any further tax cuts unless they happen some time after serious tax increases. Tim